Loon (Alphabet)

Each balloon cost tens of thousands of dollars and lasted five months. Alphabet shut down Project Loon in January 2021 after burning $100 million annually with no path to profitability. The internet-beaming balloon venture exemplifies competitive exclusion: when multiple species target the same niche, the most efficient specialist wins. Loon lost to Starlink's satellites (better coverage, longer lifespan) and terrestrial fiber (lower cost per bit).

The project launched in 2011 using what engineers called a 'garbage bag-looking' prototype, aiming to provide 1 Mbps internet to remote areas via stratospheric balloons at 18-25 km altitude. By 2018, it spun out from Alphabet's X moonshot division as an independent subsidiary. Loon demonstrated technical feasibility—a record 312-day flight from Puerto Rico in 2019, emergency connectivity for 200,000 Puerto Ricans after Hurricane Maria—but couldn't solve the economic equation.

The fatal flaw was inadequate niche specialization. Loon positioned itself between satellites and ground infrastructure without excelling at either's core advantage. Satellites offer global coverage; Loon covered regional areas. Fiber offers gigabit speeds for dollars per month; Loon delivered megabit speeds at unsustainable unit economics. Remote populations that needed connectivity most could barely afford 4G phones, much less Loon's service pricing. The value proposition dissolved.

Regulatory friction compounded the problem. Indonesian authorities suspected the balloons contained surveillance cameras, delaying approvals. Sri Lankan officials couldn't allocate radio spectrum. Each country required separate negotiations, creating what biologists call 'dispersal barriers'—obstacles preventing a species from reaching suitable habitat even when it exists.

By August 2020, Loon had spent the money from its 2019 external funding round and relied on Alphabet life support. The parent company pulled the plug six months later. Internet penetration in target markets had jumped from 75% to 93% in the preceding decade, mostly via mobile networks and fiber builds. The niche Loon intended to occupy had closed before the technology matured. Some Loon technology survives in Project Taara, providing wireless connectivity in Kenya, but the balloon business became an extinction case study: failed radiation into a niche that competitors filled more efficiently.